by: Marc Dobin

During the 2Q Earnings call on July 23, 2025, Tesla’s CFO, Vaibhav Taneja, said “”What we want to do is we want to get unsupervised done on Hardware 4 first. Once it’s done, then we will go back and look at what we need to do with the Hardware 3 cars.” This statement is a lot of things. It might be wishful thinking. It might be a guess. It does not appear to be a modification of Tesla’s warranty or Purchase Agreements, based on their current terms.

Why is this important?

The Tesla Motor Vehicle Order Agreement says this –

Future software updates may not be provided for your Vehicle, or may not include all existing or new features or functionality, due to your Vehicle’s age, configuration, data storage capacity or parts, after the expiration of your Warranty. We are not liable for any parts or labor or any other cost needed to update or retrofit the Vehicle so that it may receive these updates, or any Vehicle issues occurring after the installation of any software updates due to obsolete, malfunctioning (except as covered by your Warranty)

What does this mean? It likely means that Tesla is not responsible for upgrading your car to accommodate modern software after the warranty expires. This is why people with Model S cars bought in 2018 will not get free hardware upgrades to run actual, autonomous, “Full Self-Driving.” The car is out of warranty and is not entitled to receive the latest software and hardware. If you bought your car with a four-year warranty, and you bought it longer ago than four years from when you are reading this, the Agreement says you are out of luck.

But Marc, you might say, didn’t a Tesla officer “promise” that my car would be retrofit? There is a long list of promises made by Tesla officers, including Elon Musk, that FSD will soon be released – whether it is at the end of the year, the end of the quarter, this month, next year or when he lands on Mars. However, there is a problem and that problem is another clause in the Order Agreement.

Prior agreements, oral statements, negotiations, communications or representations about the Vehicle sold under this Agreement are superseded by this Agreement. Terms relating to the purchase not expressly contained herein are not binding.

This second clause means that whatever they say cannot be enforced against them as a binding contract. It says “this contract is all we promise to give you.” Essentially, anything else that Tesla does outside the warranty or contract, is just “goodwill.”

What does this all mean? Time is on Tesla’s side. The longer Tesla strives to “… get HW4 done first”, the more previously-sold cars go out of warranty. In this case, talk is cheap, actions are expensive. Tesla can talk all it wants about upgrading HW3 cars to HW4. Until they issue an amendment to the warranty or Agreement, they have no contractual obligation to make your car compatible with their new software once your warranty expires. This pattern may reflect a deliberate strategy to delay commitments until warranties have lapsed.

What should an owner do? Tesla owners may consider contacting resolutions@tesla.com to request clarification or a formal amendment addressing hardware compatibility. It’s prudent to consult counsel before making such requests. If they tell you that they are unwilling to do so, then you have your answer about whether or not Tesla will “Do the right thing.”

My prediction is that they will tell you that they will not commit to doing the right thing. You will likely get a response, written by a lawyer but sent by the customer service team, telling you that Tesla is unwilling to amend either agreement or provide any written promises. Tesla’s response—or refusal to provide a written commitment—could shed light on their actual position.

What if Tesla says that they won’t make that commitment. This situation may give rise to a colorable argument in arbitration, particularly where the original contract did not include language limiting Full Self-Driving to supervised features. This is especially true if your contract did not have the new qualifying word for the option – “Supervised”. If your contract says Full Self-Driving capability without any qualifier, Tesla has likely conceded that they can’t deliver on that promise.

Watch for my next post for an explanation of arbitration. What it is and what it isn’t.